Tensions, oil economics weigh on remittances from HK, UAE Filipinos

INTERNATIONAL developments are putting pressure on Filipino migrant workers’ remittances in September this year, an economist said, as concerns pull down the total dollars sent home to the Philippines during the month.

Overseas Filipino workers (OFWs) based in United Arab Emirates (UAE) and Hong Kong sent fewer dollars to their families back home in September, compared to the volume of remittances they sent in 2018.

ING Bank Manila economist Nicholas Antonio Mapa warned that the continuous decline in these countries, which host sizable numbers of Filipino workers, could affect the overall growth of remittances in the country in the coming months.

“The September growth was recorded despite hefty contractions seen from traditional sources of

OF remittances: Hong Kong and the United Arab Emirates,” Mapa said.

OF remittances sent home from Hong Kong dipped by 7.5 percent as civil unrest stymies business activities, while remittances from UAE plunged by 36 percent with oil prices subdued.

“Taken together, remittance flows from these two key jurisdictions total 8.2 percent of total OF flows and could likely weigh on growth going forward,” Mapa said.

This bucks the trend of the overall growth in total remittances sent by OFWs across the world, which grew 6.3 percent in September 2019 from the volume sent in the same month last year.

9-month growth of 4.2%

The January to September stock of remittance, meanwhile, also grew in 2019 by 4.2 percent—faster than the 2.5-percent growth in the same nine-month period last year.

Overall, Mapa said remittances have been able to provide the Philippines a stable source of foreign currency to shore up dollar liquidity, and in turn boost the peso purchasing power to help drive the engines of domestic consumption.

“With a 4.2-percent year-to-date increase in these f lows, the current account deficit will likely narrow as the trade balance has shrunk due to

import compression. This development has helped provide some support to the peso, which continues to be bolstered by financial market flows given the relatively high real yields of the Philippines,” Mapa said.

“Going forward, we expect OF remittance f lows to be sustained for the balance of 2019 and into 2020, which will in turn boost growth momentum and cushion the peso from possible pressure should import demand become resurgent in 2020,” he added.